This essay is a longer, earlier draft for a competition I participated in but did not win! Enjoy!
The trio of Entrepreneurship, Capitalism and Government policy plays an important role in allowing for mobility between various socio-economic classes. By leveraging the strengths of each element and implementing complementary strategies, we can achieve a more inclusive and prosperous society.
According to the World Bank (2008a), more than 1.4 billion people worldwide live in poverty. Although the number of poor individuals has decreased in the past two decades, poverty reduction remains a significant focus in social and economic development discussions. Latin America, the Caribbean, and Sub-Saharan Africa face challenges in economic growth and poverty reduction. Developed economies also experience poverty, with the United States reporting a poverty rate of 12.5% in 2007, and the European Union estimating around 16% of its population living below the poverty threshold. These figures highlight the presence of poverty and inequality across countries.
Considering the connection between poverty and entrepreneurial activity, Banerjee and Duflo (2007) argue that a substantial fraction of the poor globally engage in entrepreneurial endeavors to raise capital and generate income. While the existing literature explores poverty and entrepreneurship primarily in developed economies, there is evidence suggesting that “poor countries” have a higher prevalence of entrepreneurs, particularly in regions like Africa and South America.
Entrepreneurship is at the core of any prosperous economy and empowers individuals to create their own economic opportunities. Research has consistently shown a strong link between entrepreneurship and upward social mobility. According to a study conducted by the Global Entrepreneurship Monitor (GEM), countries with higher levels of entrepreneurship tend to experience greater social mobility and economic growth. The study found that entrepreneurship can act as a vehicle for individuals to move up the social ladder by creating wealth, generating employment opportunities, and fostering economic development. Moreover, entrepreneurs often contribute to their communities by creating social value, supporting local initiatives, and inspiring others to pursue their own entrepreneurial endeavours. By nurturing a culture that celebrates risk-taking and rewards hard work, entrepreneurship becomes a powerful force for upward mobility.
In his influential book “Capital in the 21st Century,” economist Thomas Piketty asserts that Western society is regressing towards a state of “patrimonial capitalism,” reminiscent of the entrenched wealth-owning class of the 19th century comprising rentiers and high-income labourers who hold an unassailable position at the pinnacle of society. This observation aligns with those who raise concerns about the illusory nature of upward social mobility within capitalism. These perspectives argue that the concept of social mobility is strategically propagated to maintain the perception of equal opportunities while serving the interests of its proponents. However, I respectfully maintain a distinct viewpoint. I believe that capitalism when harnessed appropriately, can ignite economic growth and act as a catalyst for innovation. However, it is crucial to ensure that the benefits of capitalism are distributed equitably. Government policies, such as progressive taxation and robust social safety nets, can help counterbalance the potential inequalities that may arise.
Government policy serves as a vital link in this tripartite alliance. Policies that promote fair competition, protect consumers, and enforce labour rights create a level playing field for entrepreneurs and workers alike. Collaboration between entrepreneurs, capitalists, and policymakers is essential to drive meaningful change. Public-private partnerships can leverage the expertise and resources of both sectors to address social challenges. By aligning their objectives and working together, they can foster innovation, invest in sustainable development, and create opportunities that benefit society as a whole.
In conclusion, by harnessing the power of entrepreneurship, capitalism, and government policy, we can cultivate an environment that promotes social mobility and creates opportunities for all. This requires a thoughtful and coordinated approach that ensures the benefits of economic growth are accessible to everyone, leaving no one behind.